Photo courtesy GMB Architecture-EngineeringCityFlats, a new 28-room boutique hotel, is expected to open in May inside the former Fox Jewelers building, 83-85 Monroe Center, in downtown Grand Rapids.

GRAND RAPIDS -- Sledgehammer in hand, Mayor George Heartwell on Wednesday is expected to "break ground" on a building renovation that will create a 28-room boutique hotel inside what had become a downtown eyesore.

The $3 million to $4 million project to create the CityFlats Hotel inside the five-story former Fox Jewelers building, 83-85 Monroe Center, is on track to be completed by May, said Chuck Reid, president of developer Charter House Innovations.

CityFlats' uniquely designed rooms are expected to include environmentally friendly features while embracing the historic nature of the building. A modern facade will replace the deteriorating store fronts on the first floor of the building. Upper floors will retain their white-glossed brick look.

Reid said Charter House designers are planning on incorporating the distinctive Fox's neon sign into the interior portion of the hotel in a unique way.

"I hate to give away the details," Reid said. "But it will still have that local Fox feel."

The hotel is expected include a ground floor 80-seat restaurant, lounge and coffee bar on its ground floor.

"We just think this is going to be a complement to downtown," said Sarah Lilly, marketing director for City Flats, which has its only other hotel property in downtown Holland. "Our 28-room boutique hotel is going to offer a more friendly, intimate experience."

First announced in May, Charter House closed on its purchase of the building over the summer. The building has been mostly vacant for more than a decade. The Fox jewelry store closed in 1997 after the Fox chain was bought by Oregon-based Fred Meyer Inc..

Beginning in 2004 several developers announced plans to convert the building to condominiums, but lack of financing and slow presales scuttled that idea.

If it opens as planned the hotel would be entering a challenging market which has struggled with high occupancy rates in recent years.

T.J. Hamilton | The Grand Rapids PressA pedestrian walks past the old Fox's Jewelers building which will soon be the 28-room CityFlats Hotel.

Reid said CityFlats' success in Holland combined with its relatively small number of rooms should help the project. Room rates are expected to be around $150 a night.

"It's less of a challenge for us to hit the occupancy numbers we need," he said. "We think we have a nice little niche we can draw upon. We're cautiously optimistic. With only 28 rooms we shouldn't be much of a blip for the rest of the (hotels) down there."

The project is expected to be LEED certified for its environmentally friendly construction methods and the systems and materials it incorporates.

In August the project received a $75,000 grant and approval for up to $180,000 in tax reimbursements from the city's Downtown Development Authority. State brownfield tax credits worth 20 percent of the total investment also are helping to finance the work.

In October the DDA also approved a low-cost liquor license for the hotel.

Charter House's in-house team is designing the hotel's interior. GMB is the architect and engineer for the project and GDK Construction is the construction manager. All are based in Holland. The groundbreaking, which Reid said is more of a "wall demolition," is slated for 2 p.m..